Let’s face it — when it comes to building a new business venture, the original plan is often useless. After all, one of the key traits of top entrepreneurs is adapting to a changing environment by finding the right product. In Silicon Valley lingo, this means understanding how to “pivot.”
One company that has done this quite well is Fab.com. When it launched in early 2010, it was an online social network for gay men, but it didn’t get much traction.
About six months ago, the company decided to remake itself into a so-called flash site that was focused on selling products like jewelry, furniture and toys — with cool designs. A typical sale would be invitation-only and be available for 72 hours. Meanwhile, the savings could be as much as 70% below retail prices.
It’s turned out to be a winning formula, as Fab.com is now grabbing about 300,000 new members every month and has a user base of more than 1.2 million. Just in November, the site generated 100,000 orders.
To ramp things up even more, Fab.com has raised $40 million in capital (this puts the total at $51 million, with a valuation of roughly $200 million). The lead investor was Andreessen Horowitz.
For the most part, Fab.com has been savvy with social media, and has made it easy for people to share its deal offerings via Facebook and Twitter. Fab.com calls its approach “social commerce,” which could be an emerging threat for traditional players like Amazon.com (Nasdaq:AMZN) and eBay (Nasdaq:EBAY). In fact, more than half of Fab.com’s users come from social media.
But perhaps the biggest factor for success has been actor Ashton Kutcher, who is a shareholder. If you follow his Twitter account – and more than 8 million people do — you’ll notice he’s a big fan of the site. His tweets have undoubtedly been a big draw for attracting members.
For the most part, an IPO is probably too early for Fab.com. However, if the momentum continues, it’s possible an offering would come during next year’s Christmas season. And as long as Kutcher’s brand remains strong, his next big thing could be becoming a social media tycoon.
